Last week SEC Commissioner Roisman chaired a roundtable to facilitate a review of the Proxy voting process. Retail investors often have brokers hold their shares on their behalf. Hence at Annual General Meetings, brokers vote as proxy for the investors. However, they need to get direction from the beneficial shareholder for all non-routine matters. Passive index fund managers don’t have this obligation, and Roisman questioned whether the distinction makes sense.

Roisman acknowledged that the system and process were developed decades ago. And asked: “If we were to start from scratch, what changes would we make?” Broadridge has developed a blockchain proxy process, and believe it has the answers.

Rich Daly, CEO Broadridge Financial told Bloomberg: “I think chairman Clayton is very focused on bringing back higher levels of confidence to investors in this market. And one of the things that’s missing right now, whether it’s going to take regulation or not to get it done, but for two decades at Broadridge, we’ve been trying to create an end-to-end vote confirmation. So that when you vote your shares it goes all the way to the tabulator and all the way back to you, telling you that your vote has been counted as intended.”

In May for Banco Santander’s AGM, Broadridge ran the proxy voting using blockchain. This was the second consecutive year, though the technology used has changed. JP Morgan and Northern Trust acted as custodians. A week earlier Broadridge was awarded a US patent.

“Blockchain is a terrific technology. It will enable higher levels of transparency and higher levels of confidence to all participants in the process,” said Daly. “Through that technology, we’ve proven that you can have instant results of your votes being cast and confirmed back to you.”

Blockchain Settlement

The Australian Securities Exchange is planning to launch its blockchain settlement system in 2021. “As the industry evolves to an entire clearance and settlement system, which won’t be overnight, but I believe in time it will be on blockchain where everyone will be on a distributed ledger technology platform,” commented Daly. “We’ll have more transparency into the clearance settlement. But until that is able to happen because of the complexities of the clearance settlement, we’re here for proxy right now for the participants that want it today.”

The CEO believes the result will be greater engagement from retail investors.